Dell Corporation Case Study

Final Report Subject: Business Presentation Submitting Date: Friday, January 1, 2010

Topic

DELL COMPUTER CORPORATION

Introduction: This all case is about Dell Corporation. Dell is basically founded by Michael Dell in 1984.This organization is having a well disciplined direct communication system for its customers as well as employees in organization. Dell company is producing both customer based PC’s and also organizational based servers. Dell offers its products & services to a customer based different segments including large & global businesses, education sector, health care sector, Govt., small business & consumers. Dell is capturing 30% of market in US market and 14.3% of global PC market. If we look sales at its two segments, 27% of Dell’s sales came from enterprise products and 73% from desktops & notebooks. Their basic purpose is to cut off middleman and selling to customers directly for its lower cost. This organization is having well image in US & Global market. Its structure is very complex & fluid rather than flat. Their sale growths were high till 2000 but then global crisis came and its sales revenue declined from 21.3 % to 17.6%. It started reducing its employees nearly 8% in US & 4% of its total workforce. Dell is having “Loose Matrix” corporate communication team based on customers, products & geography. Its structure is complex & fluid. Everyone in organization can talk to higher authority through Direct Mails system. So it’s easiest way of communication. Dell has unique relationship with GCI & other public-relation firms. When GCI won Dell’s account, then both Dell & GCI evaluated relationships, budget targets & results achieved. So Dell’s agency budget was being allocated in line with business needs. Dell looked internet as a source of staying connected with these agencies by using its own extranet for file sharing and online dialogue abut specific issues. Team communication is very strong in Dell. Because every once can communicate through mails. In 2001, due to global crisis, Dell’s corporate communication team was reduced to 80. In this team, 50 were based in US and remaining in Dell’s regional offices abroad. Talking about its corporate strategy, company strategy came from senior management rather than formal strategy process. Michael Dell found its strategy very important. Dell would find in late 2002 that its commitment to communication played a direct role in allowing company to implement strategy, even during crisis situation. And of course, Dell prove itself a successful company from both customer & financial perspectives in market during this crisis. Michele Moore, Allen’s predecessor, started formal & structured approach for team communication including standing meetings & conference calls. Allen was impressed by Moore work. Elizabeth Allen, vice president for corporate communication at Dell, is providing its services at Dell. She has received mails and is preparing its meeting for senior communication director around the globe. She focused on one mail and stated the criticism on Dell’s lack of spending on Research & Development. As organization is following low-cost strategy, so it’s spending low budget on research & development. She received bad comment from COO of Sony to whom Dell had a strategic relationship. So Allen is thinking about how to handle situation and what should Dell do to remedy the situation.

Question No.1 (a): “Give how structure?”

the

case

describes

Dell’s

overall

business

Dell’s overall organizational structure is very complex and fluid. But its corporate communication system is “loose matrix”. They are using direct system in both selling & communication. They are adopting lower-cost strategy to cut off middleman. Dell has also agency relationships with different public-relation firms. It corporate communication strategy is very strong, everyone can communicate with higher authority because of Direct Mails System. Dell is expanding its business all over the world and it was supposed to be the world’s 2nd largest company for enterprise products such as severs etc. Michael Dell: CEO OF Dell Company Tom Green: Corporate Sector Tom is controlling four corporate functions at Dell HR Legal Administration Corporate Communication Elizabeth Allen: vice president of corporate communication at Dell She is having control on corporate communication team of approximately 80 professionals. There are five regional directors under Elizabeth. These directors control following departments Employee Corporate Chairman’s Specialized group for Communicati public communicati Dell’s Enterprise on relation on Service Group Question No.1 (b): “What are the strengths and weaknesses structurally of its corporate communication function?” There are some strengths & weaknesses in its corporate communication system. These are given below Strengths: • Direct Communication • E-mail Based Culture • “Loose Matrix” Corporate communication structure • Relevant Communication structure in each specific area • Agency Relationships through internet • Direct Selling because of communication • Good Image in market Weaknesses: • Corporate Strategy only by senior management

• • • •

Low Budget of 10% on Research & Development sector as compared to its competitors Lack of R & D Programs with other companies Reducing corporate communication team from 120 to 80 Low Standard of enterprise products in market

Question No.2: “What challenges do you foresee for Elizabeth Allen and her team going forward and what advice would you give her?” Elizabeth Allen is the vice president for corporate communication at Dell. There could be certain challenges which she and her team have to face in future. The most important point is the Dell’s lack of spending on research and development. As Dell was also being criticized in the leading Japanese business weekly about their research and development, they certainly need to think about it and take some action. The operating cost of Dell including research and development totaled only 10 percent of revenue in 2001 which is quite less as compared to the other companies. In order to maintain its position, Dell should increase its spending on research and development. Moreover, in enterprise computing, Dell did not spend much on research, but their rivals did. Instead of spending directly on research and development, Dell formed cooperative R&D programs with other companies or licensed technology needed to develop or enhance its own products. The philosophy of Dell focused on five major areas “customers, the Dell team, direct relationships, global citizenship and winning”. Now the challenge for Dell is that, it has to maintain a balance between all the five areas. It has to satisfy the customer’s needs and wants, and maintain a good communication system within the organization which it has been doing in the past as well. Another challenge for Dell is that it has to maintain its strategy like it was doing in the past, by communicating with the suppliers, customers, management and all other important pillars of their company. Question No.3: “What role could corporate communication play at Dell to help the company advance its strategic goals?” Dell is having E-mail base communication culture. This environment made relatively easy for employees to communicate with manager and senior management and also communication to customers. E-mail based corporate communication system is an efficient source for dispersed people of the team across the zones. Senior management of the Dell Corporation began to use formal and structured approach to communication among the team including standing meetings and conference calls. Dell has been using these communication tools with other agency relationships.

For instance Dell is using internet as mean of staying connected with other agencies and also using its own extranet for file sharing and online dialogue about specific issues. Corporate strategy typically came from senior management rather than formal strategy process. Communication played a direct role in allowing the company to implement strategy. Strategy viewed as essential part of the process to be involved with execution is where you can really make a difference.

Dell work according to its strategy plans even in crisis situation for handling this situation in better way; they set precedent of being constant communication with its counterparts and suppliers in Malaysia, Taiwan, and china also along with its US based transport partners. Dell was able to successfully develop and implement a contingency plan that enabled the company to upload. Dell maintain and reinforce its overall strategy and business objectives , and emerge from the crisis from the both the customer perspective and the financial perspective in the end Dell did work well which were impossible for them and they are surviving in the business from long time by using effective communication and strategies.

Conclusion: In the last, I would like to conclude that Dell is having good image in the market that’s why it is retained in the market. Its corporate communication was effective and appropriate strategies have been applied to satisfy customer and staff by using direct communication techniques. Although there has been crisis but Dell is able to handle situations because of its proper communication techniques. It needs further advancement by spending more budgets on Research & Development sector. It’s also retains its lower cost commodities according to its goals and strategies.